Indian startup scene began to cool down in 2016 after years of growth, some of which was just wild exuberance as was shown later by several big markdowns, shutdowns and layoffs this year. But many believe Indian startups would only emerge stronger out of this bust. Here are 10 snags that hit the startup sector in 2016:

1. Valuation markdownsFour consecutive markdowns by a mutual fund managed by Morgan Stanley slashed Flipkart's value to $5.54 billion from $15.2 billion when it last raised capital in July 2015. Japan's SoftBank wrote down $555 million in Ola and Snapdeal. HSBC halved Zomato's valuation to $500 million. Markdowns point at fundamental problems with the business and make it difficult to raise more funds. The high valuations meant that Indian startup sector was not as stable as it was seen.

2. Shutdowns2016 saw many startups shutting down, a far cry from just two years ago when Indian startups were booming. Peppertap, Fashionara, Tiny Owl and AskMe were a few of the leading startups that shut shop for various reasons. Bangalore-based Data analytics company Tracxn Technologies putting together a list of nearly 800 dead and dying startups was a sure enough sign of the Indian startup bust.

3. LayoffsA few of India's biggest startups-Snapdeal, Zomato, Grofers, Ola and Quikr-laid off hundreds of employees to cut costs, build healthier balance sheets and become more competitive. After years of unplanned ramp-ups, startups were forced to bring down operating expenses in 2016. The unmitigated growth of past few years led by bullish investors began to wane this year.

4. Campus troubleStartups faced a peculiar situation when nearly 30, including Flipkart and Snapdeal, were banned from placements at IITs and IIMs after they had revoked job offers to students. This exposed the volatile nature of their operations and financial status. It also took away the sheen they had come to acquire as inspiring dream stories of success.

5. Uber versus OlaRide-hailing service Uber sued the local rival Ola for $7.5 million compensation for lost revenue and goodwill, accusing the Indian company of creating about 94,000 fake user accounts with Uber and using them to make more than 405,000 false bookings. Ola claimed the case against it had been fabricated as it had earlier accused Uber of violating a court order to switch to clean-fuel cars in Delhi.

6. Nikesh Arora's exitSudden exit of Nikesh Arora, the president of Japanese company Softbank which had invested billions in Indian startups and had lined up a lot more, was not a good sign. Softbank marked down its investment in Ola and Snapdeal by half a billion. Since Arora had played a key role in Softbank investments in India, the start-up sector lost an enthusiastic promoter. His exit also put in doubt the billions of dollars Softbank had planned to invest in India in the coming years.

7. ControversiesRinging Bells, the company that promised the cheapest smartphone at Rs 251, rode high on the startup sentiment-innovation and individual genius can beat the mega companies. After going back on its promise and then getting into legal trouble, it shut down, leaving people wiser and a bit sceptical about startup dreams. Fashion portal Jabong got embroiled in another controversy that dented confidence in Indian startups. A forensic audit commissioned by German ecommerce investor Rocket Internet apparently unearthed corporate governance violations by former top executives at Jabong.

8. Paytm's Modi adA night after demonetisation was announced by Prime Minister Narendra Modi, digital payments company Paytm came out with a full-page advertisement declaring its support for the government's step and exhorting people to take to cash-free payment. The advertisement carried Modi's picture prominently. This attracted criticism from Delhi Chief Minister Arvind Kejriwal. Many questioned if the company had got benefits from the PM.

9.Divorce at Mu SigmaDhiraj Rajaram, founder-chairman of Mu Sigma, and his wife Ambiga, the company's CEO, divorced, raising questions about its fallout on the data analytics company which is one of a handful of India-based 'unicorn' startups, the companies worth more than $1 billion.

10. Sebi warning on crowdfundingCapital market regulator the Securities and Exchange Board of India issued an investor-interest warning notice , questioning the legality of equity crowdfunding platforms that serve startup companies. The Sebi note nearly branded many digital equity crowdfunding platforms, including Grex, LetsVenture, Termsheet, Equity Crest and Tracxn, as unauthorised and unregulated. Such platforms have emerged as an alternative source of funding for startups. Nearly 200 startups have raised about Rs 400 crore on these platforms over the past two years.

Sponsored Stories

Subscribe to our Newsletters

The move is expected to give Domino's an edge over rival pizza brands and QSR chains, but some experts warned that it may prove to be a tough promise to live up to and raised concern that it would put unnecessary pressure on delivery boys.